DuPont adds some miles to road to recovery

Commentary: Economist warns that home prices won't rebound until late 2009

SAN FRANCISCO (MarketWatch) -- On a day with oil at a fresh record high and more bad news on the housing front, the market desperately needed not just good news from the recent past, but a glimmer of hope for the future. They didn't get that from DuPont's first-quarter report.

In fact, DuPont senior economist Robert Fry uttered those awful words investors still feel deep in their gut but were hoping had gone away: Things might get worse before they get better.

On a conference call following the earnings release, Fry spent a lot of time explaining why this economic downturn is different from the last one, with the thriving export market easing the pain for manufacturers and leaving home builders to bear the brunt of the bust. Seven years ago in 2001, it was the other way around.

All the bears out there, after a brief nap last week, are again growling.

Fry predicted that the struggling home builders and automakers will probably put the worst behind them by the end of the current quarter. Relief in sight, right?

Then he dropped the hammer: "Home prices, however, are not likely to hit bottom until late 2009." That's about a year later than most economists had been predicting at the start of the year.

As if that weren't enough, he went on to warn that the relatively robust growth enjoyed elsewhere in the world is not immune to what's happening in the United States. No one ever thought it was, but it's doubly disconcerting to hear it from DuPont.

On a day when oil hit a record $119 a barrel and the National Association of Realtors dishing out more grim numbers about dwindling home sales in March, investors can still be spooked by their own shadow. So to have one of the bellwether industrials and stalwart member of the Dow 30 tell us that the global marketplace might soon catch the same contagion afflicting American consumers is just downright scary.

It might be a fleeting fright, but it's an effective one, knocking DuPont
DD, -0.22%
shares 4% lower, pushing the Dow Jones Industrial Average
DJIA, +0.00%
into another triple-digit tailspin. It also encourages all the bears out there, who after a brief nap last week are again growling that this market has a long way to go before it turns around.

Today they can claim DuPont told us so.

-- Jim Jelter, corporates editor

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